Good signs for growth in Iskandar

Iskandar, at the southern tip of Johor, wraps itself around the coastline facing Singapore. On plan, it is three times the size of Singapore, and twice the size of Hong Kong.

Since the inception of Iskandar Malaysia in 2006 as a master-planned development area, total approved investments have exceeded RM172 billion ($56 billion), with some RM85 billion in projects already completed. The economy is domestically driven, but with a fair contribution from foreign investments (39%).

The services and utilities sector has contributed the most. The sector covers a broad range of industries, including logistics, healthcare, tourism, education, creative industry, finance, retail and industrial properties, emerging technologies and utilities. This is followed by substantial growth in the manufacturing sector as well as residential properties.

Major catalyst projects that have been completed in recent years include Educity, Pinewood Iskandar Malaysia Studio, Johor Premium Outlet (the first in the region) and Legoland Malaysia (the first in Asia), to name a few. Increasing investments are expected to boost the property market by creating more job opportunities, generating higher-income jobs and hence, promoting population diversity.

Much has been said and written about the supply of residential property in Iskandar. We believe with such a large area being master-planned for development, it is only to be expected that statistics will show a high number of “approved” residential developments.

However these are largely in the hands of private-sector developers who are adept at self-regulation and know how to match supply with demand. Moreover, the sell-then-build system of delivery is invaluable in preventing excessive overbuilding.

Chart 1

Source: Savills

Office sector

There has been little focus on office property in Iskandar. However, the high-speed rail link from Kuala Lumpur to Singapore, together with the proposal to extend the Singapore MRT system into Johor Baru, will be transformational.

The rapid development of the service industries in Malaysia, massive new Johor developments such as the 20,000-acre Pengerang Integrated Petroleum Complex, and the opportunity to provide a more economical office solution to Singapore, all spell a great future for modern office space in Iskandar. Set against this exciting backdrop, it may...

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